Is It Better to Buy a New or Used Car

By Larry Anderson and the Mercury Team

So you’re in the market for a car. After you’ve decided on the brand and model, you might wonder: Is it better to buy a new or used car? Both options have their pros and cons, and the correct answer depends on your budget, lifestyle, and priorities.

This guide will walk you through everything you need to consider, so you can make a confident car purchase.

New vs. Used Car Purchase: What to Consider Before You Buy

Before you start test-driving, it’s important to understand how a new or used car purchase will impact your finances and insurance.

1. Your Budget and Lifestyle

When it comes to your budget and lifestyle, here are some key factors to consider:

Upfront costs: New cars usually come with a higher price tag, while used or certified pre-owned models cost less right away.
Maintenance: New cars typically need fewer repairs early on, while used cars may require more frequent servicing.
Financing: Lenders may offer lower interest rates on new vehicles, but the total loan amount can still be higher.
Depreciation: This is the biggest hidden cost of buying new. According to Kelley Blue Book, a new car loses roughly 30% of its value in the first two years, and continues to depreciate 8–12% in subsequent years. Buying a slightly used car, especially one that’s two to three years old, helps you avoid that steep initial drop in value.

If you’re the type who values the latest tech, and plans to keep your vehicle for years, new may be the right choice. However, if you want to save money without sacrificing reliability, a slightly used or certified pre-owned car may be the smarter choice.

2. Insurance Costs: New vs. Used Cars

Is it cheaper to insure a new or used car? Typically, new cars cost more to insure because their higher value makes them more expensive to repair or replace. If you’re financing a new car, your lender will likely also require comprehensive coverage and collision protection, which can increase your premium.

On the other hand, used cars tend to have lower auto insurance rates, but there are exceptions. A high-end used luxury car or a model with expensive parts could still be costly to insure. Additionally, depending on the car’s value, you may find less flexibility with coverage options.

To understand how your choice will affect your insurance, it’s a good idea to speak with a Mercury agent to get personalized rates for the specific models you’re considering.

Benefits of Buying New

For many, the appeal of a brand-new car is undeniable. From the latest features to the peace of mind that comes with a factory warranty, there are plenty of advantages.

Safety, Warranty, and Technology

One of the biggest perks of buying new is access to the latest Advanced Driver-Assistance Systems (ADAS) features, such as automatic emergency braking, lane-departure alerts, and blind-spot monitoring.

You’ll also enjoy full warranty coverage for the first few years, which means fewer unexpected expenses. Plus, new vehicles can qualify for Mercury’s safe driver and anti-theft discounts, helping offset some of the higher insurance costs.

Easier Financing and Peace of Mind

Car manufacturers typically offer special financing incentives, low APR rates, or rebates for new vehicles that you won’t get with used ones.

And, of course, there’s peace of mind. With a new car, you know exactly what you’re getting—no surprises under the hood. You’ll drive off the lot with a clean history, full warranty, and that unmistakable new car feel.

Advantages of Buying Used or Certified Pre-Owned

If saving money is your top priority, a used car is an excellent choice. You can get a reliable vehicle without the high upfront cost and rapid depreciation of a new one.

Lower Price and Slower Depreciation

Used cars are almost always the better deal when it comes to upfront cost. And because depreciation hits hardest in the first few years, slightly used models retain their value longer.

If you want a balance between value and reliability, a certified pre-owned car is a great option. These vehicles are inspected, refurbished, and certified by the manufacturer, and they often come with an extended warranty. This gives you many of the benefits of a new car at a used-car price.

Of course, there are a few cons of buying a used car to keep in mind, such as potential wear and tear, limited warranty coverage, or an outdated infotainment system. But for many drivers, the lower purchase price and slower depreciation more than make up for those trade-offs.

Potential for Lower Insurance Premiums

So, is it cheaper to insure a used car? In most cases, yes.

Insurance rates often depend on a car’s age, safety features, and the cost of replacement. Because used cars are worth less than new ones, they typically cost less to insure, and those savings can add up over time.

Still, every driver’s situation is different. Compare quotes for both new and used versions of the same model to see the full picture.

Comparing New vs. Used Cars: What’s Right for You?

The decision to buy a new or used car is a personal one. To help you decide what car you should buy, let’s break down the key differences:

Factor	New Car	Slightly Used Car
Upfront Cost	Higher	Lower
Depreciation	Fast	Slower
Warranty	Full coverage	Limited or expired
Insurance Rates	Higher	Often lower
Tech & Safety	Latest features	Older features

The Smart Insurance Move

Before you finalize your car purchase, see how your choice will impact your insurance premiums. Request quotes for both a new model and its slightly used counterpart. This will give you a clear picture of the total cost of ownership.

Mercury can help you personalize your coverage, whether you’re buying insurance for a new car or a used one. Our agents will work with you to find the right policy that fits your needs and budget, so you get great coverage at a competitive rate.

“Insurance is a key part of your car’s total cost, but it can get overlooked,” says Larry Anderson, Director, Underwriting Operations for Mercury Insurance. “Comparing premiums before you buy helps you see the real difference between owning a new or used car.”

Find the Right Car and Coverage Today

Ultimately, whether a new or used car is better for you comes down to balancing your priorities.

If you prioritize cutting-edge safety features, warranty coverage, and peace of mind, a new car might be worth the extra cost.
If you’re focused on saving money and minimizing depreciation, a used or certified pre-owned car likely offers better long-term value.

No matter which path you choose, Mercury is here to help you protect your investment with reliable, affordable auto insurance.

Larry Anderson

Director of Underwriting Operations at Mercury Insurance

Larry Anderson is the Director of Underwriting Operations for Mercury Insurance, where he leads several teams including Audit, Training, and Regulatory Compliance. Anderson has been with Mercury since 2002 when he began as an underwriter. Anderson received his Bachelor of Arts degree in Business Administration from California State University, Fullerton.